Does the Cream franchise agreement require arbitration for disputes related to System Standards?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
F. ARBITRATION.
We and you agree that all controversies, disputes, or claims between us or any of our affiliates, and our and their respective owners, officers, directors, agents, and employees, on the one hand, and you and your owners, guarantors, affiliates, and employees, on the other hand, arising out of or related to: (1) this Agreement or any other agreement between you (or any of your owners) and us (or any of our affiliates); (2) our relationship with you; (3) the scope or validity of this Agreement or any other agreement between you (or any of your owners) and us (or any of our affiliates) or any provision of any of such agreements (including the validity and scope of this arbitration provision, which is to be determined by an arbitrator, not a court); or (4) any System Standard, must be submitted for binding arbitration, on demand of either party, to the American Arbitration Association (the "AAA"). The arbitration proceedings will be conducted by one arbitrator and, except as this Section otherwise provides, according to the AAA's then-current Commercial Arbitration Rules. All proceedings will be conducted at a suitable location chosen by the arbitrator that is within 50 miles of our or, as applicable, our successor's or assign's then-current principal place of business (currently, Columbus, Ohio). All matters relating to arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). The interim and final awards of the arbitrator shall be final and binding upon each party, and judgment upon the arbitrator's awards may be entered in any court of competent jurisdiction.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the franchise agreement mandates binding arbitration for disputes related to System Standards. Specifically, any controversies, disputes, or claims arising out of or related to the franchise agreement, the relationship between Cream and the franchisee, the scope or validity of the agreement, or any System Standard must be submitted for binding arbitration if either party demands it. This arbitration will be handled by the American Arbitration Association (AAA).
The arbitration proceedings will be conducted by a single arbitrator, following the AAA's Commercial Arbitration Rules, at a location within 50 miles of Cream's principal place of business, which is currently in Columbus, Ohio. The Federal Arbitration Act governs all matters related to the arbitration. The arbitrator's decisions are final and binding, and can be enforced in any court with the appropriate jurisdiction.
This mandatory arbitration clause means that franchisees waive their right to sue Cream in court over System Standards disputes and instead must resolve such issues through arbitration. While arbitration can sometimes be a faster and less expensive alternative to litigation, it also has limitations, such as limited discovery and appeal rights. Prospective Cream franchisees should carefully consider the implications of this arbitration provision and consult with legal counsel to understand their rights and obligations.